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Best car insurance for new drivers under 25

Fact-checked with HomeInsurance.com

    Article Highlights

    Young drivers pay among the highest car insurance premiums. Even by age 25, your car insurance rate is still more expensive than average. To find an affordable policy, it’s important for drivers under the age of 25 to compare car insurance providers and their average rates. Multiple factors impact your car insurance premium, but it is possible for young drivers to save money on their policies. 

    Car insurance for young adult drivers

    Regardless of your age, car insurance rates are personalized. Insurance companies look at factors like your ZIP code, claims history and your driving record when they calculate your premium. Carriers also attempt to gauge your level of risk, which is linked with age, to determine how much they should charge you for insurance.

    Another factor that impacts your car insurance premium is your gender. For drivers under 25, males typically pay higher car insurance premiums than females. However, the difference in price starts to decrease as you get older. By adulthood, females pay an average of $7 less than males for full coverage insurance. 

    Why is insurance for drivers under 25 so expensive?

    Car insurance for drivers under 25 is expensive because young drivers are typically riskier to insure than older drivers. Young drivers are more likely to drive distracted, not wear a seat belt and drive above the speed limit compared to more experienced drivers. In fact, data shows that car accidents are the second leading cause of death for teenagers in the United States.

    For parents, adding a young driver to their car insurance policy can cause their rate to increase by as much as 130% annually. On average, parents who insure a teen driver on their policy pay an extra $2,300 in yearly premiums. However, a driver’s risk decreases once they turn 25 and gain more experience behind the wheel. 

    In the United States, the average 25-year-old driver pays $2,036 per year for full coverage insurance. That’s higher than the national average rate for full coverage of $1,555 per year, but certain car insurance providers offer below-average rates. The table below includes the average annual full coverage rates for 21-year-olds, as a median young adult age, offered by popular providers. 

    CompanyAverage annual rate for 21-year-old femaleAverage annual rate for 21-year-old maleOverall average annual rate for 21-year-old
    Erie$1,708$1,978$1,843
    USAA$1,942$2,146$2,044
    GEICO$2,311$2,502$2,406
    Nationwide$2,446$2,783$2,615
    AAA$2,682$2,987$2,835
    Travelers$2,772$3,131$2,952
    Progressive$2,971$3,310$3,140
    Allstate$3,079$3,527$3,303
    State Farm$3,118$3,660$3,389
    Metlife$3,675$4,251$3,963
    Farmers$3,792$4,153$3,973
    The Hanover$8,329$8,946$8,637

    Quadrant information services, 2020

    Other factors that impact rates

    Car insurance companies look at a variety of criteria to determine a driver’s premium. Age is only one factor. Here are some of the other factors that will impact car insurance rates for drivers under 25.

    Driving record

    Your driving record is one of the most notable factors that will impact your car insurance premium, regardless of age. If you have any accidents or speeding tickets on your record, you’ll likely pay a higher insurance premium. The average adult driver pays $1,863 annually for full coverage insurance after one speeding ticket, and $2,125 per year for full coverage after one accident. Drivers with a clean record pay an average of $1,555 per year for full coverage.

    Vehicle type

    The type of vehicle you drive is also taken into consideration when you request a car insurance quote. Some vehicles are more expensive to insure than others, based on value, safety features and the cost of repairs or replacement. For example, it costs an average of $1,965 per year to insure a used 2015 Toyota Prius with full coverage. But to insure a used 2015 Tesla MS with full coverage, the average cost of insurance would be $3,593 per year.

    Annual mileage

    Your annual mileage has an impact on your car insurance rate. Generally, the more you drive, the higher your car insurance premium will be. Frequent drivers are more likely to get into accidents or be involved in claims than occasional drivers. For instance, California drivers who travel 2,000 miles per year pay $1,364 on average for insurance. On the other hand, drivers in the Golden State who travel 20,000 miles per year pay an average of $2,230 for insurance. 

    Ways to save on car insurance as a driver under 25

    Many people go through significant life changes in their early 20s. Some of these changes can affect your car insurance rate, and certain situations can actually help you get a lower rate. In addition, there are a variety of ways that young drivers can save money on their car insurance policy. Here are some things to consider. 

    Get married

    Whether you’re in the early stages of a new relationship or have been with a partner for an extended period of time, you might be thinking about marriage in your early 20s. You might be surprised to learn that getting married can help you get a cheap car insurance premium. 

    Some insurance companies will simply give you a lower quote for being married. But oftentimes, married couples will insure their personal vehicles on the same policy, which allows them to take advantage of a multi-vehicle discount. 

    Bundle home and auto

    If you’re starting to think about investing in real estate or purchasing your first home, bundling  home and auto insurance policies is a great way to get a lower rate. Many insurance companies that offer home and auto insurance offer this discount, and the savings can be significant. 

    In addition, many insurance companies have discounts for bundling any two policies. So even if you’re not quite ready to buy a home, you may qualify for a discount by bundling your auto insurance policy with a renters or condo insurance policy.

    Move states

    Between college, graduate school and job hunting, it’s very common for people in their 20s to leave home and move to another state. When it comes to car insurance, the state you live in and even your ZIP code have an impact on your premium.

    Factors like the state’s weather risks, accident rate, population density and number of uninsured drivers impact the average rate. In Indiana, for example, the average full coverage policy costs $1,187 per year. But in Florida, the average full coverage policy costs $2,587 per year.

    Ways to save

    Drivers under 25 don’t have to pay over-the-top rates for their insurance policy. Here are some additional ways that drivers can lower the cost of car insurance:

    • Take advantage of discounts: Most insurance companies offer discounts that can help drivers save money on their policies. You can often find discounts for being claims-free, having an anti-theft device in your car, taking a defensive driving course and being a good student.
    • Compare providers: Instead of choosing the first provider you come across, spend some time researching and comparing companies. Write down a list of the criteria that matter most to you, like good customer service or specific coverages, and look for providers that meet those needs.
    • Get multiple quotes: Ultimately, the only way to know if you’re getting the lowest car insurance rate is to get multiple quotes and compare them side-by-side. Every provider uses a different rating system and weighs factors like age differently. Get 3-4 quotes to see which company can give you the best rate.
    • Raise your deductible: Your deductible is the out-of-pocket fee you are required to pay toward a covered loss before the insurance company will reimburse you for the rest of the claim. The higher your deductible is, the lower your annual premium and your monthly payments will be. Just make sure you choose a deductible level that you can afford if you are in an accident.
    • Choose coverage strategically: It can be tempting to stack your policy with add-on coverages, like roadside assistance or accident forgiveness, but keep in mind that those optional coverages will increase the cost of your insurance policy. Only buy the endorsements you think you will actually need and use to keep the premium low.
    • Pay in full: Most insurance companies will give you a discount on your premium if you can pay the annual cost up front and in full, rather than in monthly installments. You might even be able to get a small discount for paying bi-annually. 

    The takeaway

    • Car insurance rates for drivers under 25 are generally higher than average.
    • Factors like your state, your vehicle’s model and year, your mileage and your driving record will impact the cost of your insurance.
    • There are a number of ways to get a lower premium, like comparing providers, looking for discounts, raising your deductible, paying in full and more. 

    Drivers who are under 25 often pay above-average car insurance rates, due to their increased risk level. The average 25-year-old driver pays $2,036 per year for full coverage insurance, which is higher than the national average rate of $1,555 per year. However, there are many ways that young drivers can save money on their car insurance and find a policy that fits within their budget.

    Elizabeth Rivelli

    Elizabeth is an insurance writer for coverage.com, where she covers insurance providers and reviews policies to help consumers find comprehensive and affordable coverage for every area of their life. She has more than three years of writing experience for top online insurance and finance publications.

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